SIE Exam Question 512: Answer and Explanation

Question: 512

The city of Chicago is seeking to raise $100 million through the sale of general obligation bonds and is seeking an underwriter for the issue. Which of the following is correct?

• A. The city is looking to the lower true interest cost to finance the issue.
• B. The issue will be underwritten on a best efforts basis if the city's bonds are not in high demand.
• C. The issue must be advertised and provide terms for bidding.
• D. The issue will be awarded through a negotiation.

Correct Answer: C

Explanation:

C: General obligation bonds will be advertised in the daily bond buyer and the official notice of sale will provide details on the bidding procedure.